Washington (April 7, 2004) -- America appears to be overly optimistic when it comes to retirement -- the proportion of workers who say they are saving for retirement has remained unchanged since 2001, according to the 14th annual Retirement Confidence Survey.
One-quarter (24 percent) of workers are very confident and 44 percent are somewhat confident. Almost half (47 percent) who haven't saved for retirement are at least somewhat confident about having enough money in retirement, with expectations that their retirement money will inevitably come from somewhere, according to the survey by the Employee Benefit Research Institute, the American Savings Education Council and Mathew Greenwald & Associates.
“In the 14 years that we have done the RCS, the aggregate level of worker confidence in having enough money to retire comfortably seems to remain unrelated to whatever economic conditions exist,” said Dallas Salisbury, EBRI president and chief exectuive.
The 2004 RCS shows that 58 percent of workers say they are currently saving for retirement, but the amount they have saved is low. The survey finds that 45 percent of all workers report total household assets, excluding the value of their home, of less than $25,000. The proportion of workers who say they are currently saving for retirement has remained unchanged for the past three years (58 percent in 2004 vs. 62 percent in 2003, 61 percent in 2002, and 61 percent in 2001).
Among the possible reasons identified for why workers aren't saving:
- They think they can work long past the normal retirement age: More than half of workers (54 percent) expect to work to age 65 or older, and 68 percent plan to work in retirement. However, the average retiree retired at age 62. In addition, 37 percent of retirees left the work force earlier than planned, many for negative/unexpected reasons, such as health problems or disability (35 percent) or changes in their company such as downsizing or closure (28 percent).
- They have low expectations of how much they'll need to live in retirement: Ten percent of workers think they'll need less than half of their pre-retirement income to live comfortably in retirement; 28 percent believe they'll need 50 to70 percent; 28 percent think they'll need 70 to 85 percent; and 11 percent expect to need 85 to 95 percent of their pre-retirement income.
- Most don't expect their standard of living to change in retirement: About two-thirds (64 percent) of workers believe that they'll be at least as comfortable in the years immediately following retirement as they were before retirement. Six in 10 workers don't expect their standard of living to decline as they age during retirement (59 percent).
- Most don't know when they'll be eligible for full Social Security benefits. Fifty-four percent of workers believe they'll be eligible to receive full benefits earlier than the law permits, and 6 percent think later. Only 19 percent of workers answered the question correctly.
- Almost half of Americans feel the government or their employer should shoulder more of the burden for retirement security. Thirty percent of workers feel the government should pay for a greater share, while 21 percent say the employer should be asked to pay a greater share. Only 7 percent of workers think individuals should pay a greater share.
In addition, almost one-quarter of workers say they are very willing to cut back on spending today (23 percent) and 38 percent are somewhat willing. Nineteen percent say they're not too willing or not at all willing (15 percent) to cut back.
-- WebCPA staff
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